How will Brexit affect your finances?

Britain woke up to ‘Independence Day’ last Friday, with the vote for Brexit sending shockwaves across financial markets and causing sterling to sink.

But what does Britain’s decision to leave the EU mean for our personal finances, such as our investments and mortgages?

It is far too early to predict what the impact will be in these early stages, but we do know that markets don’t like uncertainty, so while the exit process is negotiated on it is likely that they will remain volatile for the foreseeable future. This difficult financial environment means that it’s more important than ever not to act in haste and to explore every way possible to protect and grow your money.

Doing this can be very stressful however, particularly for novice investors, which is why seeking professional financial advice is so crucial. An adviser can help ensure that your portfolio is sufficiently diversified to weather stockmarket storms, and that the investments you hold are appropriate for your risk profile and financial objectives. They can also monitor these investments on your behalf, keeping you informed about how they are performing.

Keep an eye on savings rates too. If the Bank of England cuts the base rate to try and stabilise the economy, already low rates could fall even further, making it vital to hunt down the best possible returns.

Of course, it’s not just our savings and investments that Brexit impacts on. Anyone looking to make currency transfers in coming weeks, or who is planning on buying travel money for their summer holidays, will need to factor in the weaker pound.

What happens to our currency going forward again will depend on the next steps taken, but if you are planning on making a major transfer imminently, it is well worth seeking help from a foreign exchange specialist. They may be able to advise on ways you can protect yourself from further negative exchange rate movements.

Prior to the vote, the Treasury predicted that if Britain voted out, borrowing costs would rise between 0.7% and 1.1%, adding up to £1,000 a year onto the average cost of a mortgage.

However, no-one knows for certain that this will happen, and worries about the economy could potentially lead to a cut in interest rates, which means that the cost of borrowing may even fall. If you are concerned about your mortgage, keep a close eye on rates and speak to an independent mortgage broker about the options available to you.